osSetPenColor as documented allows us to set pen color by a hexadecimal value that includes a two character value for the transparency preceding the six digit hex color value. So 00 = transparent and FF = opaque, such that 00000000 is transparent black and FF000000 is opaque black. However this not the result inworld. The following script code:

ok found a solution. There's two bugs in the dynamic texture functions wrt alphas. Firstly, they won't do complete transparency, you have to have a value of at least 01 for the functions to execute properly.

Secondly, in addition to specifying the alpha in the osSetPenColor function,
in the osSetDynamicTextureDataBlendFace("", "vector", CommandList, "width:256,height:256",FALSE, 2, 0, 255, 0);
you need to add an alpha spec to the dimensions modifiers, so "width:256,height:256,alpha:01"

Unfortunately, the opensim wiki is not well written and does not mention either of these caveats. There have been some mantis issues that have better explained why you need both alpha specs in the two separate functions.

Mike, you have 255 for the alpha parameter in osSetDynamicTextureDataBlendFace. Our existing code (which works fine) uses 0 for that parameter, and "alpha:0" in extraParams.

Hi John, I already tried making that parameter 00, and, like setting zero on osPenColor alpha, and in the extraParams, it makes the function break. Unless you have 01 in the pen color alpha and 01 in the extraparams, or higher, you won't get any alpha. Zero value breaks the function, at least here in Kitely. I don't need to make the alpha parameter in osSDTDBF anything for this to work right, so its clear that this function is broken several ways.